Insurance laws Indonesia
Indonesia's insurance sector operates under a comprehensive legal and regulatory framework designed to ensure financial stability, consumer protection, and industry growth.
📜 Key Legislation
1. Law No. 40 of 2014 on Insurance
This foundational law governs the insurance industry in Indonesia, establishing the legal framework for both conventional and sharia (Islamic) insurance operations It outlines the licensing requirements, capital adequacy, and operational standards for insurance companies The law mandates that all insurance activities must be approved by the Financial Services Authority (OJK)
2. OJK Regulation No. 8 of 2024 (POJK 8/2024)
Effective from October 29, 2024, this regulation supersedes the previous POJK No. 23 of 2015 It introduces several key reforms
Simplified Product Approval:Certain insurance products can now be marketed without prior OJK approval, provided they do not involve savings or cash-value elements, credit insurance, or suretyship
Digital Insurance Products: introduces provisions for digital insurance offerings, including requirements for Electronic System Operator (PSE) registration and IT risk management
Enhanced Governance:Strengthens the role of the insurance product development committee, emphasizing the involvement of actuaries and senior management in product development and oversight
3. Law No. 4 of 2023 on Financial Sector Development and Strengthening (PPSK Law)
This law mandates the issuance of regulations to enhance the governance and operational standards of financial institutions, including insurance companies It led to the enactment of POJK 8/2024, aiming to create a more robust and competitive insurance industry
🏛️ Regulatory Authority
The Financial Services Authority (OJK) is the primary regulatory body overseeing the insurance industry in Indonesi. Established under Law No. 21 of 2011, OJK is responsible fo:
Licensing and Supervision Granting licenses to insurance companies and ensuring compliance with regulatory standard.
Consumer Protection Implementing measures to protect policyholders and ensure fair practices within the industr.
Market Development Promoting the growth and competitiveness of the insurance sector
💼 Industry Developments
*Capital Requirements: OJK plans to increase the minimum paid-up capital for insurance companies to IDR 500 billion by 2026 and IDR 1 trillion by 2028, aiming to strengthen the financial resilience of the industry
*Sharia Insurance: Regulations have been updated to enhance the governance and operational standards of sharia insurance companies, aligning them with conventional insurance practices
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